Understanding Fixed Deposit Maturity and FD Renewal Options

November 21, 2024

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When it comes to investing your money, Fixed Deposits (FDs) are a popular choice among Indians. As a matter of fact, 95% of Indian households have parked their savings in bank deposits. FDs offer security, stability, and guaranteed returns. However, once your FD reaches maturity, you have to decide whether to renew it or withdraw your funds.

What Happens When Your Fixed Deposit Reaches Maturity?:

When you open an FD, you have to select a tenure. Generally, FD tenure (for callable FDs with no lock-in period) ranges from 7 days to 10 years. The term “Fixed Deposit maturity" refers to the completion of the fixed deposit tenure. When an FD matures, you have two options: renewal or withdrawal.

Let's understand the different FD renewal processes first.

Option 1: Auto-Renewal	Option 2: Renewal by Deposit Holder Post Maturity
Convenient for continuous investment in FDs without hassle.	Manual renewal of FD after its maturity.
Opt for auto-renewal at the time of opening your FD account or during its tenure.	Visit the bank branch or renew online.
An FD renewal option in which the bank automatically renews the deposit for the same duration at prevailing interest rates.	An FD renewal option in which the bank renews the FD for the same tenure at current interest rates.
Saves the task of manually renewing the FD.	Provides flexibility to choose a tenure offering the highest interest rate.
Ensures the money continues to earn interest.	Ideal to opt for manual renewal to take advantage of the best rates available at FD maturity.
May be disadvantageous if interest rates fall at FD maturity.	Allows investors to maximise returns based on prevailing interest rates.

Withdrawal Options Before and After FD Maturity:

Apart from renewal, you also have the option to withdraw your FD investment. Let's explore the two types of withdrawals: after maturity and premature withdrawal.

Withdrawal After Maturity	Premature Withdrawal
After FD maturity, choose to withdraw manually or opt for auto-withdrawal.	Emergencies or liquidity needs may lead to considering withdrawal before FD maturity.
In auto-withdrawal, the bank credits maturity proceeds to your savings account.	Premature withdrawal attracts a penalty.
Manual withdrawal requires visiting the bank to initiate the process.	Penalties usually involve a reduced interest rate compared to the contracted rate.
There is no penalty for withdrawing after FD maturity.	The bank deducts the penalty from accumulated interest and credits the remaining amount to your savings account.

It is crucial to recognise that penalty fees for early withdrawal can vary significantly between financial institutions. These charges may range from 0% to 1%, depending on each bank’s regulations.

Therefore, before opting for an early withdrawal, it is essential to carefully examine the fixed deposit's terms and conditions to fully understand any potential fees that may apply.

Point to Note: Ujjivan SFB doesn't levy any premature withdrawal penalty withdrawals made after 6 months from the time of deposit.

How to Withdraw Your Funds Before FD Maturity?

To withdraw your money before fixed deposit maturity, you can do it either online or offline. For online withdrawals, follow these steps:

Log in to the bank's website using your internet banking login credentials.
On the account homepage, find the "Fixed Deposit" section and select "Close FD account prematurely".
Choose the specific FD scheme you wish to close.
Ensure that you confirm all pertinent information and supply the required credentials to validate the transaction.
The funds will be credited to your linked savings or current account.

For offline withdrawals, you need to visit the bank branch and fill out a fixed deposit closure form. Then you need to surrender your Fixed Deposit Receipt (FDR) along with any other necessary documents as per the bank's requirements.

Pro Tip: Avoid withdrawing your FD before maturity date. You may lose out on higher returns. Use an online Fixed Deposit ROI Calculator to compare returns.

Disclaimer: Please note that this is a generic overview of FD premature withdrawal process. If you have FD investment with Ujjivan SFB and want to close your account, kindly contact the band to understand the process.

Final Thoughts

Long-term FD investments would fetch you higher returns. Try to keep your FD untouched, if possible, till the time of maturity. Looking to grow your savings? Ujjivan SFB offers a wide range of fixed deposit products.

Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.

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November 21, 2024

FAQs

1. What happens if I forget to renew my FD after maturity?

If you forget to renew your FD or don't provide any instructions, the bank will transfer the maturity amount to your designated bank account.

2. Can I change my maturity instruction just before maturity?

Yes, you can change your maturity instruction before your FD matures by communicating with your bank at least seven days before the maturity date.

3. Are there exceptions for senior citizens regarding penalties for premature withdrawal?

Some banks offer exceptions for senior citizens, waiving penalty charges on premature withdrawals. Kindly note that Ujjivan SFB does not levy any penalty for withdrawals made after 6 months from the time of deposit.

Disclaimer